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US equities closed down over one percentage point after it was unable to best yesterday's highs. The DOW closed down 211 points near the session lows and the near-term indicator remain bearish with a promise of a repeat performance tomorrow. Crude Prices melted up to new highs not seen since early November, 2015 and the US dollar settled at the bottom level of its support zone..

Todays S&P 500 Chart

The Market in Perspective

NEW YORK (Reuters) - U.S. stocks closed down on Thursday as the Bank of Japan's shocking call to cap monetary stimulus continued to rattle investors while a late day decline in Apple shares on remarks from billionaire investor Carl Icahn added to selling pressure.

WASHINGTON (Reuters) - U.S. economic growth braked sharply in the first quarter to its slowest pace in two years as consumer spending softened and a strong dollar continued to undercut exports, but a pick-up in activity is anticipated given a buoyant labor market.

After underwhelming results from Apple Inc , Google Inc and other big tech names, investors finally found a friend in Facebook Inc after the company shredded Wall Street's forecasts for revenue, profit and user growth.

NEW YORK (Reuters) - The first few months of the year have given investors both severe selloffs and powerful rallies, and U.S. stocks have now limped into the record books with the second-longest bull market in history - with an asterisk.

(Reuters) - Abbott Laboratories said on Thursday that it would buy St. Jude Medical Inc in a $25 billion deal to expand its heart device business, but investors worried that the acquisition would not pay off as promised.

(Reuters) - Comcast Corp, the owner of NBCUniversal, said on Thursday it would buy Hollywood studio DreamWorks Animation SKG Inc for $3.8 billion to boost its family-friendly offerings and help it take on media conglomerate Walt Disney. The acquisition will add major children's franchises to Universal's film library such as "Shrek," "How to Train Your Dragon" and "Kung Fu Panda," which it could tap for its growing theme parks and consumer products businesses.

WOLFSBURG, Germany (Reuters) - Volkswagen , battling to rebuild its reputation following a scandal over rigged emissions tests, said on Thursday it could see light at the end of the tunnel following a deal with U.S. authorities last week.

DETROIT (Reuters) - Ford Motor Co reported first-quarter net income that more than doubled thanks to robust deliveries of pickup trucks in North America and a profit rebound in Europe, but cautioned that results in the second half of the year would likely not be as strong.

In a not so surprising outcome, the number of companies beating earnings estimates currently is above the 12-quarter average. Via Zacks Research:

"While growth remains problematic, actual results are turning out to be less bad relative to the low levels to which estimates had fallen ahead of this reporting cycle. More companies are coming out with positive surprises for both earnings as well as revenues."

"Total earnings for the 209 S&P 500 members that have reported results are down -5.5% from the same period last year on -1.6% lower revenues, with 75.6% beating EPS estimates and 56% coming ahead of top-line expectations."

So, this is all good news and a reason to buy stocks, right? Not so fast.

The problem, as shown in the chart above, is that the pace of growth in earnings is far weaker than previous averages. Furthermore, while Wall Street will point to the "beat rate" as a reason why the current "bull market" is still intact, it has been a function of excessively low expectations.

When JPM quant Marko Kolanovic released his latest report today, we were expecting him to read his latest insight on the positioning of quant funds, on the relative imbalance of risk parity, or perhaps whether market gamma was suggesting that the market is poised for an inflection point, either lower or higher. Instead, we were surprised to read an extended analysis looking at how trapped the "out of options" central banks are, what the next steps are for the global economy, how the market is now as overvalued as it was before the 2000 crash, how rising rates "would make the current S&P 500 level look like a bubble", and the exhaustion of all available policy options, which he dubbed the "endgame." To wit:

If investors lose confidence that the debt can ever be repaid, they will reduce their holdings, increasing the cost to governments or inviting more central bank buying. This can eventually result in the devaluation of all currencies against real assets such as gold, high inflation or even outright defaults (as was the case in Greece). If such a trend develops in one of the large economies, it could have far-reaching consequences.

We were most surprised by Kolanovic's strong case to buy gold, although considering it comes just one week after a Pimco economist dared to propose that central banks should monetize gold next in an attempt to massively boost inflation expectations (while send the price of gold to $5,000), perhaps we are not that surprised.

* * * .

We are confident readers will find it just as an engaging read.

From JPM's Marko Kolanovic

Central banks, Inflation, and Debt Endgame

With the Fed and BoJ meetings behind us, markets are increasingly accepting that central banks are nearly out of options. Central banks can hardly raise interest rates ...

The front end of the oil price complex continues to get all the attention because it seems to further the more optimistic narrative. It is the back end, however, that is most significant. The nearer maturities of the futures curve reflect more the funding environment than the fundamental view of oil and the economy. The lack of continued liquidation has "allowed" investors (and speculators who are no longer, apparently, deserving of mainstream scorn) to bid up the front, but the outer years remain flat and unimpressed.

The entire curve has moved higher, to be sure, but the $6 or so in 2018 maturities and out isn't nearly as impressive as the $18 at the front. Viewing the curve as it is now compared to what it was entering the last liquidation wave, however, reveals the changed disposition especially upon more macroeconomic considerations.

The steepness is almost gone with the flattening centered around $50. At one time not all that long ago, such a low level was unthinkable. A year ago, the curve was settling more toward $65 to $70. The difference is reality, where the gravity of desperate funding "pulled" on the f ...

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